How to Choose Your Business Structure As an Online Coach
Let’s be honest, building your dream business from scratch is no easy task.
It starts off with a little dream and soon it becomes a HUGE life-consuming project.
Even though you start off with a ton of enthusiasm, the journey can test your limits.
You might find yourself wondering,
“Am I really cut out for this?”
“Can I really afford to be pouring all these resources into something that hasn’t made me a cent?”
“Should I just head back to my corporate life and forget about it?”
But look at you!
Here you are, on the other side of that self-doubt spiral with a business you can call your own and a comfy cash flow.
That is a HUGE accomplishment.
You have proven that your online business is profitable and now you are ready to go PRO.
And friends, I am SO glad you didn’t give up when things got tough. Your ideas are fab and your clients are so lucky to have you.
I am also glad that you are looking to go pro. And by that I mean, that you are ready to establish a legal entity for your biz.
This is going to help you stay legally protected and establish a lot of legitimacy in the online space.
You’re a pro, so make it known!
When you’re thinking of setting up a legal entity for your biz, you have to land on the perfect business structure.
And because there are quite a few options to choose from, I want to help you make the BEST choice for you.
So today, we’re going to talk about how to choose your business structure and the best one to build your online coaching business empire.
I’ll walk you through the four different business structures including how to register for them.
I’ll also tell you how much these options cost AND tell you the three professionals that you *must* talk to before making your final decision.
If you’re new here, I’m Molly Anna Luna, your life and business success strategist. I'm all about helping coaches, consultants and wannabe corporate escapees create lifestyle and financial freedom, or what I refer to as building true wealth.
I’m of the mind that having true wealth allows us to be present for the moments that matter most in life.
So, without further ado, let’s launch into the 4 options you have when it comes to choosing a structure for your business.
Right this way!👇🏻
The 4 Types of Business Structures
A sole proprietorship is the easiest business entity to set up.
So if you’re looking to keep it simple, listen up!
This is perfect for beginners because it doesn’t cost anything and only requires your social security number. If you are making $0-50,000 per year, then set up as a sole proprietorship.
This is why it’s the most common version of business entities for entrepreneurs in the United States.
But keep in mind that you will carry all of the managerial and financial responsibilities.
If you are ready to take that on, then this is the perfect structure for you during this early phase of your business journey.
Once you do have a little more cash flow in your biz you might want to take a look at a different structure.
A partnership is when two, sometimes more, people come together and sign an agreement to equally take on financial and managerial obligations for the business.
If you have a fabulous, responsible, and trustworthy business partner, this is a great option!
This structure is also easy to set up AND helps mitigate the risk against your personal finances.
If you and your partner in crime are looking to create a separate entity for your biz, this structure is the way to go.
Limited Liability Corporation (LCC)
A limited liability company is a partnership that benefits you and your partner but is set up like a corporate business structure.
This means that there is very little risk on your personal finances because registering as an LCC gives you insurance that acts as a buffer between you, your personal finances, and your business’s gains or losses.
Setting up this type of business structure takes a bit more paperwork and a small financial investment, but I’ll help you break that all down when we start talking pricing.
As a general rule of thumb, if you are making $50,000-$100,000 per year, then consider an LLC.
Registering your business as a corporation means that no one is solely responsible for the managerial, operational, and financial aspects of it.
It is officially a standalone structure.
You’ll be issued an EIN number so your personal and business structure finances will be completely separate.
And then your business will usually have a board made up of many different members with a variety of skills.
You might have a chief financial officer, a chief operating officer, and a chief executive officer, etc.
There are two different ways to set up a corporation: a C Corp or and S Corp.
Each option comes with different tax benefits that you’ll want to consider once your business hits a certain capital threshold.
In general, once you are making over $100,000 each year, then consider registering as a full-blown Corporation.
But don’t worry! I’m gonna help you figure what experts to meet with in order to make these kinds of big biz decisions.
Get an Expert’s Opinion When Deciding How To Choose Your Business Structure
Once you have a sense of what structure might be the most suitable, you need to get an expert’s opinion.
And friends, asking for help from someone who devoted their career to advising people on this specific topic is NEVER a waste of money.
It might seem like a big investment upfront, but try not to panic. Your investments in your biz always pay off!
Do what’s best for your biz and don’t cut corners when it comes to important decision-making milestones.
There are three pros you want to chat with when figuring out how to choose your business structure.
When your business feels like it’s moving from the idea stage into the implementation stage, you’ll want to set up a meeting with a lawyer.